Investors who want in on a generous subsidy, the angel tax credit, better hurry. The program is almost sold out for the year.

The last of the $12.2 million in credits for investments in qualifying start-ups will likely be gone by mid-August, based on the latest word from the state's program manager.

The Minnesota program is a straightforward, get-a-check-from-the-taxpayers subsidy for purely private business activity, so it's remarkable that the allocation has lasted this deep into the year. It's remarkable as well that angel credits have such broad bipartisan support when the economic case remains mostly unproven.

Jeff Cornwall, a professor of entrepreneurship at Belmont University in Tennessee, said not to bother looking for a credible economic study supportive of such subsidies, as he knew of none.

"The conventional wisdom is that it shapes behavior of angel investors, but not in whether they make the investment," Cornwall said.

What the credits can influence, he said, is an investment's timing. It's his guess that Minnesota's angels will mostly sit out the rest of the year, as any investor can quickly learn that the allocation of credits gets reloaded to $12 million after the turn of the year.

Certainly no policymaker intended to set up this pattern.

The Minnesota program dates to April 2010, and the idea was to encourage funding that could launch firms that could become the Medtronics of the next generation, and in turn generate high-skill, high-wage jobs. There are companies in whole industries that need not apply, including real estate development and retail trade, as the credit goes only to investors who fund businesses that use or are working on a proprietary technology. Certified businesses need to have 51 percent of payroll in Minnesota, and still be small, with fewer than 25 employees.

The person who typically provides capital for that kind of business is known as an angel, although many of them look for promising investment ideas through clubs or associations. Collectively the angel community is certainly an economic force, as the Center for Venture Research at the University of New Hampshire said angel investments totaled $22.5 billion in the country last year. The state said 563 individuals received credits for their Minnesota investments made in 2011.

Twenty-two states reward angel investing with some form of tax credit, and Minnesota is in rare company for offering a "refundable" tax credit. The refundable feature means that an investor can get more refund than he or she even had in tax liability. For angels with no Minnesota tax liability, like the happily retired in Florida, they can file a Minnesota return and get the whole credit mailed to them in the form of a refund check.

The cap in any year is $250,000 in credits for a joint filing couple. Both businesses in the program and the investors must get certified by the state before they can play.

From its start in 2010 the program grew significantly in 2011. Coming into 2012 legislators were aware of the potential to run out of credits, but a proposal to increase the allocation died as part of a broader tax bill in 2012. Tim Mahoney, a DFL representative from St. Paul and a strong supporter of the program, said he assumes that an increase from the current $12 million per year "will be in any tax bill that comes through the Legislature" in 2013.

After talking with a half-dozen participants certified for the program this year, it's far from clear if there is as much support for it among entrepreneurs as there is in the halls of the Capitol. Just one, David A. Shupe of the Minneapolis educational software firm eLumen Collaborative, called the angel tax credit "critical" to his fundraising effort.

But what is clear is that having a credit in the market part of the year and out of the market for the rest of the year is aggravating.

Plymouth-based start-up MetaModix Inc. raised about $1 million earlier in 2012, and its investors got about $254,000 in credits. Co-founder and CEO Kedar Belhe said "most of my investors did not look at it as a requirement, they looked at it as a bonus." He said any real investor commits to a deal only after first carefully considering the odds of losing everything vs. winning big.

But bonus for his investors or not, Belhe is one of those entrepreneurs who sounded almost like the state would be better off without a program distorting the financing market, as the door is about to shut for the year. Belhe needs to raise more money, as MetaModix is developing a device to treat metabolic disease and Type II diabetes that's still in the preclinical stage. He has a long and expensive way to go before obtaining regulatory clearance to sell his device.

Belhe said that "our financial needs are such that we really can't wait until next year." So he is planning to broaden his fundraising targets from just individuals to include small institutional investors.

Another participant this year was Bill Whalen, one of the five co-founders of Curenci LLC, a payments technology provider in Bloomington that took over the assets of a business that had run out of money. They raised $10,000 early this year that qualified for the credit, and this past week the founders launched an effort to raise far more capital.

Whalen says that "to me the angel credit thing is just a great cherry on top of somebody's sundae."

That does not mean he is not hustling, as he said he and his partners are well aware of how few credits remain. "We are trying to sneak in the back door and get some of that allocation."

Lee Schafer came to the Star Tribune after 15 years as a corporate officer, consultant and investment banker in the Twin Cities. He has been a columnist for Twin Cities Business magazine and was senior editor for Corporate Report Minnesota. Follow @LeeASchafer